Many clients sign estate planning documents without paying much attention to the clauses they contain. That is no surprise; the documents are complex, and death and disability are issues that no one wants to face. One clause that is easily overlooked is how incapacity could be determined—and how
the client could be stripped of the authority to serve in a fiduciary
or trustee capacity. That’s what happened to NBA team owner Donald Sterling, who is in a court battle in part because of that trust clause which most clients are likely gloss over.
There are several lessons that an estate planning team, including personal financial planners and attorneys, can learn from this case—and pass on to clients. They include:
- Clients should review all the “boilerplate” clauses in a document to make sure that clauses that may seem benign when the donor is healthy and competent would also apply later.
- Planning for disability or incapacity should be as important to a client as planning for death.
- Thinking through who will serve as successor trustee if the donor/trustee is removed as trustee for reasons of incapacity is important. Nuances, such as whether spousal estrangement should disqualify a party from serving as sole trustee, really do matter.
Click here to read Patricia’s complete article as it appears in CPA Insider.